37760 Federal Register / Vol. 63, No. 134 /Tuesday, July 14, 1998 /Rules and Regulations

FEDERAL DEPOSIT INSURANCE

CORPORATION

12 CFR Part 360

RIN 3064–AB92

Resolution and Receivership Rules

AGENCY: Federal Deposit Insurance

Corporation.

ACTION: Final rule.

SUMMARY: As part of the FDIC’s

systematic review of its regulations and

written policies under section 303(a) of

the Riegle Community Development and

Regulatory Improvement Act of 1994

(CDRIA) the FDIC is making technical

amendments to its receivership

regulations. The amendments address

least-cost resolutions and the security

interests of Federal Home Loan Banks in

FDIC-administered receiverships.

EFFECTIVE DATE: August 13, 1998.

FOR FURTHER INFORMATION CONTACT:

Mitchell Glassman, Deputy Director,

Division of Resolutions and

Receiverships, (202) 898–6525; Rodney

D. Ray, Counsel, Legal Division, (202)

898–3556; Catherine A. Ribnick,

Counsel, Legal Division, (202) 736–

0117, Federal Deposit Insurance

Corporation, 550 17th Street, N.W.,

Washington, D.C. 20429.

SUPPLEMENTARY INFORMATION:

I. Sections 360.1 and 360.2

Section 13(c)(4)(E)(i) of the Federal

Deposit Insurance Act (FDI Act) (12

U.S.C. 1823(c)(4)(E)(i)) generally

prohibits the FDIC from taking any

action after August 31, 1994 with

respect to a depository institution which

would, directly or indirectly, have the

effect of increasing losses to any deposit

insurance fund by protecting the

institution’s uninsured depositors or

other creditors. Section 360.1 was

promulgated in compliance with a

statutory mandate, contained in section

13(c)(4)(E)(ii) of the FDI Act (12 U.S.C.

1823(c)(4)(E)(ii)), that the FDIC issue

regulations implementing clause (i) not

later than January 1, 1994.

Section 360.2 was originally

promulgated by the Federal Home Loan

Bank Board (FHLBB) to, among other

reasons, set forth expressly the rights of

Federal Home Loan Banks (Bank or

Banks) regarding collateral securing

Bank advances in liquidating

receivership estates. The regulation was

subsequently transferred to the FDIC,

pursuant to section 402(a) of the

Financial Institutions Reform, Recovery,

and Enforcement Act of 1989 (FIRREA)

Pub. L. 101–73, 103 Stat. 183, 357–58

(1989), when the FHLBB and FSLIC

were abolished and has remained

substantively unchanged since its

transfer to the FDIC.

II. The Proposed Rule

As part of the FDIC’s review of its

regulations pursuant to section 303(a) of

CDRIA, the FDIC previously issued a

notice of proposed rulemaking regarding

§§ 360.1 and 360.2, 62 FR 7725

(February 20, 1997). The proposal

consisted of two parts. The first part

proposed a revision to § 360.1, a rule

promulgated pursuant to a statutory

directive regarding least-cost

resolutions. The second part proposed

removing § 360.2, addressing secured

claims of Banks in FDIC-administered

receiverships. The proposed action

regarding § 360.2 was premised upon

the limited applicability of the

regulation to the security interests of a

discrete class of creditors, i.e., the

Banks, in liquidating receivership

estates; the statutory protections

enjoyed by the Banks under section

306(d) of the Competitive Equality

Banking Act of 1987 (CEBA), Pub. L.

100–86, 101 Stat. 552, 601–02 (12 U.S.C.

1430(e), footnote 1) and other

subsequently enacted federal statutes;

the significant decline in the number of

institutions being placed in liquidating

receiverships in recent years; and the

FDIC’s belief that matters addressed

therein could be addressed, in the

future, on a case by case basis. The FDIC

provided a comment period of 60 days

from publication of the notice of

proposed rulemaking in the Federal

Register.

Twelve comments were received

within the comment period, all of which

addressed the proposed removal of

§ 360.2. After the receipt of the

comments, additional information was

requested and received by the FDIC

from the commenters.

III. Comments on the Proposed Rule

The FDIC received no comments on

the proposed amendment to § 360.1, but

all of the commenters favored retention

of § 360.2. Although the commenters’

reasons for retaining the regulation

varied, they expressed support for the

clarity and certainty the regulation

provides in addressing the security

interests of Banks when an insured

depository institution fails and is placed

in receivership. They also expressed

concerns that additional measures that

the Banks may take to protect their

security interests against the risk of a

borrower being placed in receivership,

absent the regulation, may affect the

cost or availability of certain types of

credit to borrowers from the Banks.

IV. Retention of § 360.2 and

Amendments to §§ 360.1 and 360.2

Based upon a review of the comments

received, the Board of Directors has

decided to retain § 360.2. This decision

is based upon: (1) The concerns over

removal of the regulation that have been

expressed by the commenters; (2) the

fact that the FDIC has, in the past,

normally satisfied obligations owed to

the Banks shortly after the failure of an

institution to obtain a release of the

failed institution’s collateral; (3) the

regulation is currently in place,

therefore, retaining it maintains the

existing status quo; and (4) there may be

operational benefits to retaining the

regulation.

As indicated in the FDIC’s notice of

proposed rulemaking, § 360.1 is being

amended to correct an erroneous

statutory reference in paragraph (b) from

‘‘12 U.S.C. 13(c)(4)(A)’’ to ‘‘12 U.S.C.

1823(c)(4)(A)’’. In addition, § 360.2 is

being amended to add ‘‘the claim is’’ to

paragraph (e)(1) to achieve parallel

construction with paragraph (e)(2).

Paragraph (e)(2) also is being amended

to correct a typographical error by

replacing the word ‘‘by’’ with the word

‘‘but’’, as well as to revise the reference

to section 306(d) of CEBA to replace the

Public Laws reference with the

appropriate United States Code citation

for the paragraph.

Paperwork Reduction Act

No collections of information

pursuant to section 3504(h) of the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.) are required by this notice.

Consequently, no information has been

submitted to the Office of Management

and Budget for review.

Small Business Regulatory Enforcement

Fairness Act

The Office of Management and Budget

has determined that the final rule is not

a ‘‘major rule’’, as defined in the Small

Business Regulatory Enforcement

Fairness Act of 1996 (SBREFA) (5 U.S.C.

801 et seq.). SBREFA generally requires

an agency to report rules to Congress

and the Comptroller General for review.

The reporting requirement is imposed

when the agency issues a final rule.

Accordingly, the FDIC will file the

appropriate reports.

Regulatory Flexibility Act

Pursuant to section 605(b) of the

Regulatory Flexibility Act (5 U.S.C. 605)

the Board of Directors certifies that this

rule will not have a significant

economic impact on a substantial

number of small entities. Although the

final action differs from the initial

proposal, which was previously
Federal Register / Vol. 63, No. 134 /Tuesday, July 14, 1998 /Rules and Regulations 37761

certified by the Board of Directors,

because the FDIC is retaining a

regulation which it had proposed to

remove, the final action merely

maintains the existing status quo and

makes only non-substantive technical

revisions to the existing sections.

List of Subjects in 12 CFR Part 360

Savings associations.

For the reasons set out in the

preamble, part 360 of chapter III of title

12 of the Code of Federal Regulations is

amended as follows:

PART 360—RESOLUTION AND

RECEIVERSHIP RULES

1. The authority citation for part 360

continues to read as follows:

Authority: 12 U.S.C. 1821(d)(11), 1821

(e)(8)(D)(i), 1823(c)(4); Sec. 401(h), Pub. L.

101–73, 103 Stat. 357.

2 Paragraph (b) of § 360.1 is revised to

read as follows:

§ 360.1 Least-cost resolution.

* * * * *

(b) Purchase and assumption

transactions. Subject to the requirement

of section 13(c)(4)(A) of the FDI Act (12

U.S.C. 1823(c)(4)(A)), paragraph (a) of

this section shall not be construed as

prohibiting the FDIC from allowing any

person who acquires any assets or

assumes any liabilities of any insured

depository institution, for which the

FDIC has been appointed conservator or

receiver, to acquire uninsured deposit

liabilities of such institution as long as

the applicable insurance fund does not

incur any loss with respect to such

uninsured deposit liabilities in an

amount greater than the loss which

would have been incurred with respect

to such liabilities if the institution had

been liquidated.

3. Paragraph (e) of § 360.2 is revised

to read as follows:

§ 360.2 Federal Home Loan banks as

secured creditors.

* * * * *

(e) The receiver for a borrower from

a Federal Home Loan Bank shall allow

a claim for a prepayment fee by the

Bank if, and only if:

(1) The claim is made pursuant to a

written contract that provides for a

prepayment fee, provided, however, that

such prepayment fee allowed by the

receiver shall not exceed the present

value of the loss attributable to the

difference between the contract rate of

the secured borrowing and the

reinvestment rate then available to the

Bank; and

(2) The indebtedness owed to the

Bank by such borrower is secured by

sufficient collateral in which a perfected

security interest in favor of the Bank

exists or as to which the Bank’s security

interest is entitled to priority under

section 306(d) of the Competitive

Equality Banking Act of 1987 (CEBA)

(12 U.S.C. 1430(e), footnote (1), or

otherwise so that the aggregate of the

outstanding principal on the advances

secured by such collateral, the accrued

but unpaid interest thereon and the

prepayment fee applicable to such

advances can be paid in full from the

amounts realized from such collateral.

For purposes of this paragraph (e)(2),

the adequacy of such collateral shall be

determined as of the date such

prepayment fees shall be due and

payable under the terms of the written

contract providing therefor.

By order of the Board of Directors.

Dated at Washington, DC, this 7th day of

July 1998.

Federal Deposit Insurance Corporation.

James LaPierre,

Deputy Executive Secretary.

[FR Doc. 98–18620 Filed 7–13–98; 8:45 am]

BILLING CODE 6714–01–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. 98–ANE–17–AD; Amendment

39–10654; AD 98–15–03]

RIN 2120–AA64

Airworthiness Directives; General

Electric Company GE90 Series

Turbofan Engines

AGENCY: Federal Aviation

Administration, DOT.

ACTION: Final rule; request for

comments.

SUMMARY: This amendment adopts a

new airworthiness directive (AD) that is

applicable to General Electric Company

(GE) GE90 series turbofan engines. This

action requires initial and repetitive

eddy current inspections (ECI) for

cracks in the high pressure compressor

(HPC) stage 2–6 spool, and, if necessary,

replacement with serviceable parts. This

amendment is prompted by reports of

cracks in the stage 3–4 and stage 4–5

interstage seal teeth and spacer arms.

The actions specified in this AD are

intended to identify cracks in the HPC

stage 2–6 spool, which could result in

an uncontained engine failure and

damage to the aircraft.

DATES: Effective July 29, 1998.

The incorporation by reference of

certain publications listed in the

regulations is approved by the Director

of the Federal Register as of July 29,

1998.

Comments for inclusion in the Rules

Docket must be received on or before

September 14, 1998.

ADDRESSES: Submit comments in

triplicate to the Federal Aviation

Administration (FAA), New England

Region, Office of the Regional Counsel,

Attention: Rules Docket No. 98–ANE–

17–AD, 12 New England Executive Park,

Burlington, MA 01803–5299. Comments

may also be sent via the Internet using

the following address: ‘‘9-adengineprop@faa.dot.gov’’. Comments

sent via the Internet must contain the

docket number in the subject line.

The service information referenced in

this AD may be obtained from General

Electric Technical Services, Attention:

Leader for distribution/ microfilm,

10525 Chester Road, Cincinnati, OH

45215; telephone (513) 672–8400 Ext.

130, fax (513) 672–8422. This

information may be examined at the

FAA, New England Region, Office of the

Regional Counsel, 12 New England

Executive Park, Burlington, MA; or at

the Office of the Federal Register, 800

North Capitol Street, NW., suite 700,

Washington, DC.

FOR FURTHER INFORMATION CONTACT: Ian

Dargin, Aerospace Engineer, Engine

Certification Office, FAA, Engine and

Propeller Directorate, 12 New England

Executive Park, Burlington, MA 01803–

5299; telephone (781) 238–7178, fax

(781) 238–7199.

SUPPLEMENTARY INFORMATION: The

Federal Aviation Administration (FAA)

has received reports of cracked high

pressure compressor (HPC) stage 2–6

spools installed on General Electric

Company (GE) GE90–76B/ –77B/ –85B/

–90B/ –92B series turbofan engines.

There have been 10 HPC spools found

with cracks. The investigation into the

cause of the cracking is ongoing;

however, the FAA has determined that

the HPC stage 2–6 spool may develop

cracks in the stage 3–4 and stage 4–5

interstage seal teeth that could

propagate into the stage 3–4 and stage

4–5 spacer arms, aft of the seal teeth.

This AD requires inspection of the

spacer arm aft of the seal teeth and also

includes an inspection requirement for

the spacer arm forward of the seal teeth

that provides additional data to support

the investigation and mitigates the risk

of an HPC stage 2–6 spool failure from

a crack propagating into the spacer arm

forward of the seal teeth. The FAA has

determined the most likely cause of

crack initiation is due to areas of heat

affected zone in the seal teeth that is the

result of excessive heat generated when